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on Energy Economics |
| By: | Newbery, David M G |
| Abstract: | Renewable electricity, particularly solar PV and wind, creates external benefits of learning-by-doing that drive down costs and reduce CO2 emissions. The Global Apollo Programme called for collective action to develop enewable energy. This paper sets out a method for assessing whether a trajectory of investment that involves initial subsidies is justified by the subsequent learning-by-doing spillovers and if so, computes the maximum justifiable additional subsidy to provide, taking account of the special features of renewable electricity -- geographically dispersed and variable quality resource base and local saturation. Given current costs and learning rates, accelerating the current rate of investment appears globally socially beneficial for solar PV in most but not all cases, less so for on-shore wind. The optimal trajectory appears to involve a gradually decreasing rate of growth of installed capacity. |
| Keywords: | cost-benefit analysis; learning-by-doing; PV; Subsidies; wind |
| JEL: | C6 H23 H43 Q42 Q5 Q54 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12700&r=ene |
| By: | Newbery, D. |
| Abstract: | Renewable electricity, particularly solar PV, creates external benefits of learning-by-doing that drives down costs. If eventually economic, these technologies will thereafter create social value by reducing carbon emissions with value greater than the cost of abatement. This paper sets out a method for assessing whether a trajectory of investment that involves initial subsidies is justified by the subsequent learning-by-doing spillovers and whether it is worth accelerating current investment rates. Given current costs and learning rates, accelerating the current rate of investment appears globally socially beneficial, particularly if that investment is deployed in high insolation locations. |
| Keywords: | Solar PV, learning-by-doing, subsidies, carbon emissions |
| JEL: | C6 H23 H43 Q42 Q54 Q55 |
| Date: | 2017–03–21 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1715&r=ene |
| By: | Axel Gautier; Julien Jacqmin; Jean-Christophe Poudou |
| Abstract: | Prosumers are households that are both producers and consumers of electricity. A prosumer has a grid-connected decentralized production unit (DPU) and makes two types of exchanges with the grid: energy imports when the local production is insuffcient to match the local consumption and energy exports when local production exceeds it. There exists two systems to measure the exchanges: a net metering system that uses a single meter to measure the balance between exports and imports and a net purchasing system that uses two meters to measure separately power exports and imports. Both systems are currently used for residential consumption. We build a model to compare the two metering systems. Under net metering, the price of exports paid to prosumers is implicitly set at the price of the electricity that they import. We show that net metering leads to (1) too many prosumers, (2) a decrease in the bills of prosumers, compensated via a higher bill for traditional consumers, and (3) a lack of incentives to synchronize local production and consumption. |
| Keywords: | decentralized production unit, grid regulation, solar panel, grid tariff, storage |
| JEL: | D13 L51 L94 Q42 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6814&r=ene |
| By: | Rohan Best (Crawford School of Public Policy, The Australian National University); Paul J. Burke (Crawford School of Public Policy, The Australian National University) |
| Abstract: | This paper analyzes the roles of policies and preferences in national adoption of solar and wind energy technologies. We use cross-sectional and panel regressions for both the European Union and a broader international sample. We find that countries that price carbon emissions have gone on to adopt more solar and wind energy. The aggregate level of policy support, measured in euros per megawatt hour, appears to have been important for solar energy adoption. We also find that solar energy adoption has been larger in countries with higher proportions of people concerned about climate change. In addition, we assess the effects of other key explanators including financial system size and income levels. |
| Keywords: | Solar energy, wind energy, carbon pricing, aggregate policy support, renewable energy preference, climate change perception |
| JEL: | Q40 Q42 Q48 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:een:ccepwp:1803&r=ene |
| By: | GianCarlo Moschini (Center for Agricultural and Rural Development (CARD)); Harvey E. Lapan; Hyunseok Kim |
| Abstract: | We construct a tractable multi-market equilibrium model designed to evaluate alternative biofuel policies. The model integrates the US agricultural sector with the energy sector and it explicitly considers both US ethanol and biodiesel production. The model provides a structural representation of the renewable fuel standard (RFS) policies, and it uses the arbitrage conditions defining the core value of renewable identification number (RIN) prices to identify the relevant competitive equilibrium conditions. The model is parameterized, based on elasticities and technical coefficients from the literature, to represent observed 2015 data. The model is simulated to analyze alternative scenarios, including: repeal of the RFS; projected 2022 RFS mandates; and, optimal (second best) mandates. The results confirm that the current RFS program considerably benefits the agriculture sector, but also leads to overall welfare gains for the United States (mostly via beneficial terms of trade effects). Implementation of projected 2022 mandates, which would require further expansion of biodiesel production, would lead to a considerable welfare loss (relative to 2015 mandate levels). Constrained (second-best) optimal mandates would entail more corn-based ethanol and less biodiesel than currently mandated. |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:ias:cpaper:17-wp575&r=ene |
| By: | Gabriel E. Lade (Center for Agricultural and Rural Development (CARD)); James Bushnell |
| Abstract: | The Renewable Fuel Standard (RFS) is among the largest renewable energy mandates in the world. The policy is enforced using tradeable credits that implicitly subsidize biofuels and tax fossil fuels. The RFS relies on these taxes and subsidies to be passed through to consumers to stimulate demand for biofuels and decrease demand for gasoline and diesel. Using station-level prices for E85 (a high-ethanol blend fuel) from over 450 retail fuel stations, we show that pass-through of the ethanol subsidy is, on average, complete. However, we find that full pass-through takes four to six weeks and that local market structure of gasoline stations influences both the speed and overall level of pass-through. JEL Codes: Q42, Q58, H23 |
| Keywords: | retail fuel markets, E85, renewable fuel standard, subsidy pass-through |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:ias:cpaper:16-wp570&r=ene |
| By: | Brown, David P. (University of Alberta, Department of Economics); Eckert, Andrew (University of Alberta, Department of Economics); Lin, James (Alberta Department of Energy, Government of Alberta) |
| Abstract: | We examine the role of information transparency in Alberta's wholesale electricity market. Using data on firms' bidding behavior, we analyze whether firms utilize information revealed in near real-time through the Historical Trading Report (HTR), which is released 10 minutes after each hour and contains a complete (de-identified) list of every firms' bids into the wholesale market from the previous hour. We demonstrate that firms are often able to identify the offers of specific rivals by offer patterns adopted by those firms. For one of these firms, these patterns are associated with higher offer prices. This is consistent with allegations by Alberta's Market Surveillance Administrator that firms may be utilizing unique bidding patterns to reveal their identities to their rivals to elevate market prices. We show that certain firms respond to rival offer changes with a lag consistent with responding to information revealed through the HTR, and that they respond differently to different firms, suggesting that they are able to infer identification. |
| Keywords: | Electricity; Market Power; Information; Regulation; Antitrust |
| JEL: | D43 L40 L51 L94 Q48 |
| Date: | 2018–02–28 |
| URL: | http://d.repec.org/n?u=RePEc:ris:albaec:2018_002&r=ene |
| By: | Lunn, Pete |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:rb201804&r=ene |
| By: | Fabra, N. |
| Abstract: | A simple model is built up to capture the key drivers of investment and pricing incentives in electricity markets. The focus is put on the interaction between market power and investment incentives, and the trade-o_ it introduces when designing the optimal regulatory instruments. In contrast to the energy-only market paradigm that assumes perfect competition, our model demonstrates that in the presence of market power scarcity prices do not promote efficient investments, even among risk-neutral investors. Combining price caps and capacity payments allows to disentangle the two-fold objective of inducing the right investment incentives while mitigating market power. Bundling capacity payments with financial obligations further mitigates market power as long as strike prices are set sufficiently close to marginal costs. |
| Keywords: | scarcity pricing, market power, capacity markets, reliability options |
| JEL: | L13 L51 L94 |
| Date: | 2018–02–13 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1814&r=ene |
| By: | Pollitt, M.; Yang, C.; Chen, H. |
| Abstract: | This paper examines power sector reform in China's largest province, Guangdong, following the publication of the No.9 document of the China State Council on 'Deepening Reform of the Power Sector' in March 2015. We look at the operation of the pilot wholesale power market in Guangdong in the light of international experience. We discuss how the power market pilot is working in Guangdong and the extent to which the current market design is in line with successful power markets we see elsewhere. We examine the evidence on whether the market reform has successfully brought new players into the electricity system in Guangdong. We consider the effects of the reform on the operational and investment decisions of firms in the sector. We conclude with several lessons for the Chinese government's ongoing power sector reform programme. |
| Keywords: | power market reform, international experience, Guangdong, China, industrial electricity price |
| JEL: | L94 |
| Date: | 2018–02–26 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1818&r=ene |
| By: | Mardi Dungey; Ali Ghahremanlou; Ngo Van Long |
| Abstract: | We extend existing theoretical frameworks describing electricity markets where each generator provides a Market Operator (MO) with a supply schedule in advance. The MO combines these with demand forecasts to produce equilibrium prices and instructs firms on their dispatch. We incorporate the possibility that generating firms may rebid (or revise) their supply schedule prior to dispatch - an important feature of markets in many countries which has not previously been included in theoretical models. We show that a dominant firm can gain substantially by manipulating its bids, and take advantage of the opportunity to submit rebids. In the Australian National Energy Market (NEM) where settlement prices are an average of six dispatch prices, it can, for example, withhold capacity at lower prices for the first bid in a period, creating a price hike, and then add capacity at lower prices to ensure dispatch. Using data from the Australian NEM we provide the first empirical evidence consistent with the hypothesized theoretical behaviour in the observed data. |
| Keywords: | electricity markets, Australia, rebidding |
| JEL: | Q41 D43 D23 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6819&r=ene |
| By: | Nguyen, Hieu Trung; Battula, Swathi; Takkala, Rohit Reddy; Wang, Zhaoyu; Tesfatsion, Leigh S. |
| Abstract: | The increasing deployment of distributed energy resources (DERs) is disrupting every aspect of power system operations, from retail distribution to wholesale production and transmission. This paper reports on the development of an agentbased test system enabling the study of new transactive energy system (TES) designs to ensure the reliable efficient operation of integrated transmission and distribution (ITD) systems with growing DER penetration. This ITD test system is used to explore the ability of a non-profit Distribution System Operator (DSO), participating within an ITD system, to use an innovative TES design to manage the power usage of DER devices in accordance with the local goals and constraints of DER owners, and to extract flexible ancillary services from DER devices in return for appropriate market-based compensation. |
| Date: | 2018–02–28 |
| URL: | http://d.repec.org/n?u=RePEc:isu:genstf:201802280800001000&r=ene |
| By: | Hyland, Marie; Bertsch, Valentin; Title: Compensating communities to reduce resistance to energy infrastructure development |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:rb201801&r=ene |
| By: | Ralph Sonenshine |
| Abstract: | In the late 1990s, many U.S. states deregulated electric utilities, allowing for competition among power generators. Deregulated states then adopted a retail choice program, allowing customers to choose their power provider. In addition, a significant merger wave among large utility companies ensued after deregulation. What was the impact of these changes on consumer welfare? While this issue has been widely studied, the results remain ambiguous. This study examines the effects of these events, by analyzing electricity price and output changes among deregulated and regulated states from 2001 through 2014. The study finds that deregulation may have had a positive effect when states adopted certain measures, such as retail choice or fuel changes, that enhanced competition and lowered costs |
| Keywords: | Deregulation, Mergers, Regulated Industries, natural |
| JEL: | L94 L98 G34 G14 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:amu:wpaper:2017-12&r=ene |
| By: | Quentin Hoarau; Yannick Perez |
| Abstract: | Photovoltaic generation and electric mobility are both disruptive technologies in the power and transport sectors raising several issues regarding power grids. Precisely, questions about synergistic potentials when combining these two technologies have attracted academics' interest. Recent researches on this topic demonstrate that interactions between photovoltaic generation and electric mobility could decrease the overall burden on power grids, and empower one technology with the others specificities. Indeed, electric vehicles could use photovoltaic energy and benefit from a low-cost and carbon-free electricity to charge. In return, photovoltaic systems would use the bi-directional flexibility of electric vehicles battery to maximize their self-consumption. As these synergies operate, these technologies economic spillovers may improve, stimulating their joint deployment. The objective of this paper is to develop a systematic framework in order to review the different under-lying conditions for synergy as they have been studied in the literature. It appears that this synergy was driven by technical characteristics as well as economic aspects. First, this synergy happens in middle-sized spatial configuration (large workplace buildings and charging station) and less obviously at other scales and in situation of technologically diversified system. Second, if it was poorly studied in the literature, the economic context (cooperation level between stakeholders, regulation and policies...) of interactions between photovoltaic generation and electric mobility is crucial for a successful synergy. Finally, we identify several remaining issues about these conditions that further researches could investigate. |
| Keywords: | Electric Vehicle, Photovoltaic energy, Smart grid |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:cec:wpaper:1802&r=ene |
| By: | Harold, Jason; Cullinan, John; Lyons, Sean |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:rb20170401&r=ene |
| By: | Florian Fizaine (Université de Savoie Mont Blanc – IREGE); Sondès Kahouli (Université de Bretagne Occidentale, Ifremer, CNRS, UMR 6308 AMURE, IUEM) |
| Abstract: | We propose a critical analysis of fuel poverty indicators and demonstrate that choosing a given fuel poverty indicator and, in particular, its threshold level, is central to the identification of the fuel-poor population. First, we conducted an inter-indicator analysis to show how profiles of fuel-poor households vary depending on the indicator selected. More specifically, after identifying groups of affected house- holds using a set of objective and subjective measures, we designed a multidimensional approach based on a combination of complementary methods, namely, a multiple correspondence analysis and a hierarchical and partitioning clustering analysis to analyse their characteristics. Through this framework, we highlight the difficulty of identifying a “typical profile” for fuel-poor households because of the significant variability in their characteristics and we show that the composition of the population depends on the choice of the indicator. Second, we applied an intra-indicator analysis using two objective expenditure-based indicators with thresholds. In particular, we conducted a sensitivity analysis based on a logit model including variables describing household and dwelling characteristics. We show that the profiles of fuel-poor households as well as the drivers of fuel poverty vary considerably with the chosen threshold level. Given these findings, we stress the need to review how we currently rely on conventional fuel poverty indicators to identify affected groups and give some recommendations. |
| Keywords: | Fuel poverty, Groups identification, Measures dismantling, Multidimensional analysis, Sensitivity analysis |
| JEL: | C20 Q40 Q48 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:fae:ppaper:2018.01&r=ene |
| By: | Vincent Bertrand (Climate Economics Chair, Univ. Paris Dauphine, Paris, France; CRESE EA3190, Univ. Bourgogne Franche-Comté, F-25000 Besançon, France); Sylvain Caurla (UMR INRA – AgroParisTech, Laboratoire d’Economie Forestière, 54042 Nancy Cedex, France); Elodie Le Cadre (Climate Economics Chair, Univ. Paris Dauphine, Paris, France); Philippe Delacote (UMR INRA – AgroParisTech, Laboratoire d’Economie Forestière, 54042 Nancy Cedex, France) |
| Abstract: | We compute the optimal subsidy level to fuelwood consumption that makes it possible to achieve the French biomass energy consumption target. In this view, we model the competitions and trade-offs between the consumption of fuelwood for heat (FW-H) and the consumption of fuelwood for power generation (FW-E). To do so, we couple a forest sector model with an electricity simulation model and we test different scenarios combining FW-H and FW-E that account for contrasted potential rise in carbon price and potential reduction in the number of nuclear plants. We assess the implications of these scenarios on (1) the budgetary costs for the Government, (2) the industrial wood producers’ profits, (3) the costs savings in power sector for the different scenarios tested and (4) the carbon balance. We show that the scenario with the higher carbon price and the lower number of nuclear plants is the less expensive from a budgetary perspective. Indeed, when associated with a high carbon price, co-firing may increase FW-E demand with lower subsidy level, which enables reducing the cost of reaching the target. However, in this case, FW-E crowds-out part of FW-H which may cause political economy issues. From a carbon balance perspective, a FW-H only scenario better performs than any other scenario that combines FW-H and FW-E due to the relatively low emissions factors of alternative technologies for electricity generation, in particular nuclear energy. |
| Keywords: | Forestry sector, Bioenergy, Biomass-based electricity, Carbon pricing, Nuclear power |
| JEL: | Q41 Q48 Q23 |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:lef:wpaper:2017-03&r=ene |
| By: | Déborah Leboullenger; Frédéric Lantz; Catherine Baumont |
| Abstract: | This paper aims to find evidence of a “green value†in a local housing market using notarial data on a small urban area in France. We use frontier functions, an original approach that departs from customary hedonistic regressions, to model housing market prices as a production set bordered by an efficiency frontier estimated by Data Envelopment Analysis (DEA). The paper tests if difference in prices (i.e. the distance from the frontier) can be explained by energy performance measured as a normalized categorical ascending kWh/m²/year grade (or Energy Performance Certificate -EPC). We show that there is significative evidence for energy performance's market value. The “Green Property Value†is estimated to range between 1% and 3% of the price for medium-high performance buildings. Our findings are robust to the specifications of the first (frontier estimation) and the second stage (residual analysis). We then propose a cost-benefit analysis to evaluate the return on retrofit investment a household would get from higher market value. We find that housing green property value accounts for a part, between 4.6% in houses and 6.6% in collective dwellings, of the real terms investment in energy retrofit. We interpret our findings with regard to spatial dependencies that affect the market and the heterogeneity between the private and the public social housing stocks. |
| Keywords: | Residential Housing Market, Energy Retrofit, Green Value, Efficiency Analysis, Frontier Functions, Data Envelopment Analysis, Energy Performance Certificates |
| JEL: | C5 Q41 Q51 R15 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:drm:wpaper:2018-8&r=ene |
| By: | Alem, Yonas (Department of Economics, School of Business, Economics and Law, Göteborg University); Hassen, Sied (Environment and Climate Research Center of the Ethiopian Development Research Institute); Köhlin, Gunnar (Department of Economics, School of Business, Economics and Law, Göteborg University) |
| Abstract: | We use a field experiment to identify how differences in preferences and autonomy in decision-making result in sub-optimal adoption of technologies that can maximize the welfare of all members of the household. We create income-earning opportunities and elicit willingness- to-pay (WTP) for energy-efficient cookstoves through a real stove purchase experiment with randomly chosen wives, husbands and couples. Experimental results suggest that women, who often are responsible for cooking and for collecting fuelwood, reveal a higher preference than men for the improved stoves. Using an instrumental variables tobit estimator, we show that women who have higher decision-making autonomy reveal higher WTP than those who have lower decision-making autonomy. A follow-up survey conducted 15 months after the stove purchase show that autonomy does not affect stove use. Our findings highlight the importance of considering division of labor, different preferences, and bargaining power differences within the household when promoting adoption of new household technologies. |
| Keywords: | Preference Difference; Decision-making; Autonomy; Willingness-to-pay |
| JEL: | C93 D13 O12 Q56 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0724&r=ene |
| By: | Wietschel, Martin; Plötz, Patrick; Pfluger, Benjamin; Klobasa, Marian; Eßer, Anke; Haendel, Michael; Müller-Kirchenbauer, Joachim; Kochems, Johannes; Hermann, Lisa; Grosse, Benjamin; Nacken, Lukas; Küster, Michael; Pacem, Johannes; Naumann, David; Kost, Christoph; Kohrs, Robert; Fahl, Ulrich; Schäfer-Stradowsky, Simon; Timmermann, Daniel; Albert, Denise |
| Abstract: | [Einleitung und Motivation] Sektorkopplung bzw. Sektorenkopplung ist in den letzten Jahren in der Energie- und Klimapolitik als neue Begrifflichkeit aufgetaucht. Der hohe politische Stellenwert der Sektorkopplung in der heutigen energiepolitischen Diskussion spiegelt sich unter anderem im Klimaschutzplan 2050 (BMUB 2016) und in dem Grünbuch Energieeffizienz (BMWi 2016a) wider. Sektorkopplung soll einen entscheidenden Beitrag zur Erreichung ambitionierter Klimaschutzziele durch den verstärkten Einsatz von erneuerbarem Strom in den Sektoren Verkehr, Wärme und Industrie zur Substitution von fossilen Energieträgern leisten (siehe BMWi 2016a; BMUB 2016; aber auch RP-Energie-Lexikon 2017; Wietschel 2015a). Auch in weiten Teilen der Energiewirtschaft besteht ein Interesse an Sektorkopplung zur Erschließung neuer Optimierungs- und Geschäftsmöglichkeiten innerhalb eines sich verändernden Energiesystems (vgl. BDEW 2017a; DVGW 2017). Nicht zuletzt widmet sich auch der wissenschaftliche Diskurs der Sektorkopplung. Gegenstand der Untersuchungen sind derzeit die Möglichkeiten und konkreten Ausgestaltungsformen einer Kopplung unterschiedlicher Sektoren bzw. Teilsysteme aus ökologischer, ökonomischer, technischer, regulatorischer und sozialwissenschaftlicher Sicht (u. a. IWES et al. 2015; Ecke et al. 2016, dena 2017a, Acatech 2017, Wietschel et al. 2015). Wenngleich die Erforderlichkeit sowie die zukünftige Ausgestaltung der Sektorkopplung seitens Politik, Wirtschaft und Wissenschaft derzeit intensiv diskutiert werden, existiert bislang keine einheitliche und umfängliche Definition. Statt-dessen liegen mitunter deutlich abweichende Auffassungen des Begriffs vor und es existieren eine Reihe von Definitionen bzw. Verständnisse des Begriffs Sektorkopplung nebeneinander. Eine Literatursichtung führt dazu, dass einige Autorinnen und Autoren Sektorkopplung eher sehr eng fassen und darunter nur die Umwandlung von Erneuerbaren (Überschuss-)Strom in Gase oder Flüssigkeiten fassen. Andere wiederum unter Sektorkopplung alle Aspekte der Verzahnung von energierelevanten Sektoren verstehen und hier lediglich eine Abgrenzung zu Lösungen sehen, die nur innerhalb eines Sektors auftreten, wie die Eigennutzung von einer Dach-PV-Anlage im Haus [...]. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fisisi:s012018&r=ene |
| By: | Egenhofer, Christian; Stroia, Christian; Popov, Julian |
| Abstract: | The Central and South Eastern Europe Gas Connectivity (CESEC) is a major political success for the European Commission and the member states in their bid to integrate Central and South East European (C&SEE) energy systems. CESEC has already made a significant contribution to strengthening the regional and wider European energy security. Broadening the scope of CESEC to include electricity, renewables and energy efficiency offers a unique opportunity to address energy systems in their full complexity, not just in technological and project ‘silos’. The region of Central and South East Europe has significant energy efficiency, renewables and new technology potential that could be scaled up at low cost. In this paper, the authors set out a number of proposals for the Terms of Reference for the new CESEC Working Groups to further channel progress in the integration of the Central and South East European energy market. |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:eps:cepswp:12332&r=ene |
| By: | Csaba Weiner (Institute of World Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences) |
| Abstract: | For a long time, gas has been the fuel that Hungary is particularly sensitive to in terms of security of energy supply; thus, gas diversification has become a key issue. However, along with the 2014 decision on the construction of new units at the Paks Nuclear Power Plant (Paks-2), the energy agenda has changed considerably. Paks-2 will have a decisive role in ensuring security of supply, and, in fact, it has already begun to perform a role in energy decisions. This paper aims to assess, on the one hand, the security of the stationary fuel supply in Hungary by applying the conventional three-dimensional approach, encompassing availability, affordability and sustainability, and, on the other, use our own gas diversification scheme to analyse the issue of gas diversification. We find that considerable progress has been made on gas diversification, and Paks-2 can also be included in our diversification scheme as a kind of sectoral diversification option. Prior to the Paks-2 decision, Hungary had followed an upward trajectory for its security of supply, despite certain negative developments. With Paks-2, Hungary’s dependence will both decrease and increase – as new types of risks emerge. There is great uncertainty about Hungary’s energy policies and security of supply, with the role of coal, gas and renewables in the energy/electricity mix still not settled. Their future is expected to be heavily dependent on political decisions rather than energy market factors, though energy market uncertainties are also high. |
| Keywords: | Hungary, Russia, energy security, security of supply, gas diversification, coal, gas, nuclear energy, renewables |
| JEL: | L71 L95 O13 P28 Q4 |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:iwe:workpr:238&r=ene |
| By: | Hache, E.; Massol, O. |
| Abstract: | Iran’s energy and petrochemical exports have recently been restricted by a series of international sanctions. This paper focuses on one of the country’s exports, namely methanol - a petrochemical increasingly used for fuel blending and traded at various locations worldwide – and empirically explores the relationships among the North American, European, and Asian markets to investigate the incidence of these sanctions. The analyses are conducted under a parity bounds framework based on Negassa and Myers (2007). The model was applied to the main methanol importing markets to estimate the effects of the sanctions on the degree of spatial integration. The findings document the occurrence of a complete reconfiguration of the spatial extent of the methanol markets. Under the sanctions, an increased degree of market integration was observed across the Atlantic, while fragmentation rose between Europe, South East Asia, and the two giant economies of China and India which both experienced lower prices. |
| Keywords: | Iran; sanctions; law of one price; market integration; methanol |
| Date: | 2016–04–06 |
| URL: | http://d.repec.org/n?u=RePEc:cty:dpaper:14973&r=ene |
| By: | Kenneth Gillingham; Anders Munk-Nielsen |
| Abstract: | Pricing greenhouse gases is widely understood as the most efficient approach for mitigating climate change, yet distributional effects hamper political acceptance. These distributional effects are especially important in transport, the fastest growing sector for greenhouse gas emissions. Using rich data covering the entire population of vehicles and households in Denmark, this study uncovers an important feature of driving demand: two groups of much more responsive households in the lower and upper tails of the work distance distribution. We further estimate the causal effect of public transport–a critical determinant of the upper tail–and show how public transport access can both reconcile differences in fuel price elasticities between the United States and Europe, and considerably influence the distributional effects of fuel pricing. |
| Keywords: | transportation, distributional effects, urban form, environmental taxes |
| JEL: | L90 R40 Q40 N70 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6792&r=ene |
| By: | Geir H. M. Bjertnaes |
| Abstract: | A tax on fuel combined with tax-exemptions or subsidies for purchase of fuel-efficient vehicles is implemented in many countries to reduce greenhouse gas emissions and other negative externalities from road traffic. This study, however, shows that a tax on fuel should be combined with heavier taxation of fuel-efficient vehicles to curb externalities from road traffic. The tax on fuel is implemented to curb externalities linked to both consumption of fuel and road use. The heavier tax on fuel-efficient vehicles prevents that motorists avoid the road user charge on fuel by purchasing fuel-efficient vehicles. |
| Keywords: | transportation, optimal taxation, environmental taxation, global warming |
| JEL: | H20 H21 H23 Q58 R48 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6789&r=ene |
| By: | Kennedy, Sean; Lyons, Sean; Morgenroth, Edgar; Walsh, Keith |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:rb201802&r=ene |
| By: | Bernhardt, A.; Melo, Teresa; Bousonville, Thomas; Kopfer, Herbert |
| Abstract: | Fuel is one main cost driver in the road haulage sector. An analysis of diesel price variations across different European countries showed that a significant potential for cutting fuel expenditure can be found in international long-haul freight transportation. Here, truck drivers are often on the road for several consecutive days or even weeks. During their trips, they must comply with the rules on driving hours and rest periods which in the European Union are governed by Regulation (EC) No 561/2006. In the literature, refueling problems have attracted limited attention so far. In the present study, we show why a joint consideration of drivers' rest periods and breaks and refueling is important and how the choice of time windows, the planning of driver activities, and the determination of refueling stops and quantities can be done accordingly. For a given sequence of customer locations and gas stations with different fuel prices along the route chosen to serve these customers we propose a mixed integer linear programming (MILP) model and describe the corresponding solution process. In this multicriteria optimization problem with the goals to minimize lateness, traveling time and fuel expenditures, we consider multiple soft time windows at customer locations. We extend the MILP model developed by Bernhardt et al. (2016) by integrating refueling decisions. Additionally, a preprocessing heuristic is described which reduces the number of gas stations to be considered along the route and thus the solution space and the computational effort. Numerical experiments were conducted for instances derived from real data that include vehicle routes for one week and information on gas stations along the vehicle routes. Different parameter settings for the preprocessing heuristic were analyzed. |
| Keywords: | road transportation,refueling,fuel cost,driver scheduling,rest periods,breaks,driving hours,Regulation (EC) No 561/2006,mixed integer linear programming models |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:htwlog:14&r=ene |
| By: | Mamothoana Difeto (Department of Economics, University of Pretoria, Pretoria, South Africa); Reneé van Eyden (Department of Economics, University of Pretoria, Pretoria, South Africa); Rangan Gupta (Department of Economics, University of Pretoria, Pretoria, South Africa); Mark E. Wohar (College of Business Administration, University of Nebraska at Omaha, Omaha, USA and School of Business and Economics, Loughborough University, Leicestershire, UK) |
| Abstract: | In this paper we make use of a number of different panel data estimators, including fixed effects, bias-corrected least squares dummy variables (LSDVC), generalised methods of moments (GMM), feasible generalised least squares (FGLS), and random coefficients (RC) to analyse the impact of real oil price volatility on the growth in real GDP per capita for 17 member countries of the Organisation for Economic Co-operation and Development (OECD), over a 144-year time period from 1870 to 2013. Our main findings can be summarised as follows: overall, oil price volatility has a negative and statistically significant impact on economic growth of OECD countries in our sample. In addition, when allowing for slope heterogeneity, oil producing countries are significantly negatively impacted by oil price uncertainty, most notably Norway and Canada. |
| Keywords: | Oil price volatility, economic growth, OECD countries, panel data |
| JEL: | Q43 C33 O55 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:201813&r=ene |
| By: | Christiane Baumeister; James D. Hamilton |
| Abstract: | Traditional approaches to structural vector autoregressions can be viewed as special cases of Bayesian inference arising from very strong prior beliefs. These methods can be generalized with a less restrictive formulation that incorporates uncertainty about the identifying assumptions themselves. We use this approach to revisit the importance of shocks to oil supply and demand. Supply disruptions turn out to be a bigger factor in historical oil price movements and inventory accumulation a smaller factor than implied by earlier estimates. Supply shocks lead to a reduction in global economic activity after a significant lag, whereas shocks to oil demand do not. |
| Keywords: | oil prices, vector autoregressions, sign restrictions, Bayesian inference, measurement error |
| JEL: | Q43 C32 E32 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6835&r=ene |
| By: | Konstantinos Gavriilidis (Management School, University of Stirling); Dimos S. Kambouroudis (Management School, University of Stirling); Katerina Tsakou (School of Management, Swansea University); Dimitris S. Tsouknidis (Departments of Commerce, Finance, and Shipping) |
| Abstract: | This paper examines whether the inclusion of oil price shocks of different origin as exogenous variables in a wide set of GARCH-X models improves the accuracy of their volatility forecasts for spot and 1-year time-charter tanker freight rates. Kilian's (2009) oil price shocks of different origin enter GARCH-X models which, among other stylized facts of the freight rates examined, take into account the presence of asymmetric and long-memory effects in tanker freight rates. The results reveal that the inclusion of aggregate oil demand shocks and precautionary oil-specific demand shocks (price) significantly improves the accuracy of the volatility forecasts drawn. |
| Keywords: | volatility forecasting, tanker freight rates, oil price shocks, GARCH-X models. |
| JEL: | G11 G12 G13 G14 G20 G24 |
| Date: | 2018–03–02 |
| URL: | http://d.repec.org/n?u=RePEc:swn:wpaper:2018-27&r=ene |
| By: | Daniel Bierbaumer; Malte Rieth; Anton Velinov |
| Abstract: | We study the state-dependent trading behavior of financial intermediaries in the oil futures market, using structural vector autoregressions with Markov switching in heteroskedasticity. We decompose changes in futures price volatility into changes in the slopes of traders' demand curves and in the variability of their demand shocks. We find that the downward-sloping demand curve of intermediaries steepens significantly during turbulent times. Moreover, the variance of intermediaries' own demand shocks doubles during these episodes. These findings suggest that the futures pricing of intermediaries is nonlinear and increases the hedging costs of producers and processors of oil when volatility is high. |
| Keywords: | Commodities, Structural VAR, Financial Intermediaries, State-dependency, Asset Pricing, Markov Switching |
| JEL: | C32 G12 G21 Q02 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1722&r=ene |
| By: | Bruce A. Babcock; Gabriel E. Lade (Center for Agricultural and Rural Development (CARD)); Sebastien Pouliot (Center for Agricultural and Rural Development (CARD)) |
| Abstract: | The Environmental Protection Agency has proposed to deny a request to move the point of obligation under the Renewable Fuel Standard (RFS) from oil refiners to fuel blenders. Supporters of the request argue that those refiners who do not have the fuel blending capabilities of large, integrated oil companies are in danger of going out of business due to their need to buy RINs (Renewable Identification Numbers) to show compliance with the RFS. We demonstrate that this claim is false and that moving the point of obligation would have no impact on refiner profits. The key point that is neglected in the arguments of those who want to move the point of obligation is that added refiner costs from complying with the RFS are passed on to blenders through higher gasoline prices. We show that high RIN prices, holding constant gasoline consumption levels, have no impact on profits of refiners, blenders, or integrated oil companies. Moving the point of obligation from refiners to blenders similarly will have no impact on profit levels other than moving administrative costs of showing compliance from refiners to blenders. High RIN prices that result from substitution of ethanol for gasoline impact refiner profits from a loss of market share to biofuel producers. This loss of profits from lost market share is consistent with the objective of the RFS to substitute biofuels for gasoline. Moving the point of obligation from refiners to blenders would have no impact on this loss. |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:ias:cpaper:16-pb20&r=ene |
| By: | Afees A. Salisu; Umar B. Ndako (Monetary Policy Department, Central Bank of Nigeria, Nigeria.); Idris Adediran (Department of Economics, Obafemi Awolowo University, Nigeria.) |
| Abstract: | In this paper, we examine the role of oil in GDP forecast of selected OPEC member countries using the Autoregressive Distributed Lag Mixed Data Sampling (ADL-MIDAS) approach. Both the in-sample and out-of-sample forecasts of this approach are evaluated and compared with some competing models namely AR(1), ARFIMA, ARIMA and ARDL models. We find that allowing for high frequency oil price data in the predictive model of GDP will enhance its forecast performance. The ADL-MIDAS is found to out-perform all the competing models for both the in-sample and out-of-sample forecast. In addition, we find that the higher the data frequency of oil price, the better the forecast performance. These results are robust to different data frequencies, multiple forecast horizons, and alternative proxies for oil price and measures of forecast performance. |
| Keywords: | Oil price; GDP, ADL-MIDAS; Linear time series models; Forecast evaluation |
| JEL: | C12 C22 Q42 Q43 Q47 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:cui:wpaper:0044&r=ene |
| By: | International Monetary Fund |
| Abstract: | Uganda is poised to become a major oil producer if key preconditions are met. A joint venture of three international companies plans a major Uganda Oil Project, in partnership with the government. Up to 1.7 billion barrels (bbl) of recoverable reserves have been discovered with a high exploration success rate. However, challenges for commercialization of petroleum have been significant: infrastructure for commercialization of oil, and a number of outstanding regulatory and fiscal issues addressed in this report. Oil market developments since mid-2014 have created a difficult environment for project decisions. Uganda has made important progress in the legal framework for petroleum development, with two new Acts of 2013. The first competitive licensing round is being held in 2015. |
| Keywords: | Sub-Saharan Africa;Uganda; |
| Date: | 2017–12–13 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:17/367&r=ene |
| By: | International Monetary Fund |
| Abstract: | Kuwait is facing “lower-for-longer” oil prices from a position of strength, owing to large financial buffers, low debt, and a sound financial sector. Nonetheless, lower oil prices have weakened fiscal and external positions and generated large fiscal financing needs. The key challenge for the authorities is to accelerate reforms that underpin fiscal consolidation, while creating incentives for private initiative and investment and fostering job creation for nationals. |
| Keywords: | Kuwait;Middle East; |
| Date: | 2018–01–26 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:18/21&r=ene |
| By: | Lujala, Päivi; Brunnschweiler, Christa; Edjekumhene, Ishmael |
| Abstract: | This article examines how Ghanaians access information about national and local issues in general and, in particular, how and to what extent they receive information about national and local natural resource revenue management. It also studies how the likelihood of having heard about resource revenue governance depends on individual, household, and geographical characteristics. The article uses descriptive and multivariate analysis based on a unique survey of over 3500 participants from 2016. The study finds that less than 10% of respondents knew how natural resource revenues (NRR) are managed locally, even in areas with mining activity or petroleum production; less than one-third had heard about NRR management in Ghana. Common citizens, those in remote rural areas, and those with limited English skills were least likely to have heard about NRR management, compared to elected duty bearers, traditional authorities, and other opinion leaders. Generally, people have few reliable information sources. |
| Keywords: | Developing countries, Ghana, information seeking behavior, information sources, media, mining, natural resource revenues, petroleum, survey, transparency |
| JEL: | O13 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:84788&r=ene |
| By: | Derya Keles (UMR INRA – AgroParisTech, Laboratoire d’Economie Forestière, 54042 Nancy Cedex, France); Johanna Choumert (Economic Development Initiatives (EDI) Limited, High Wycombe, United Kingdom.); Pascale Combes-Motel (Centre d’Etude et de Recherche sur le Développement International (CERDI), UMR CNRS 6587, University of Clermont Auvergne, Clermont-Ferrand, France); Eric N. Kéré (African Development Bank, Abidjan, Ivory Coast) |
| Abstract: | In this article, we explore the role of biofuel production on deforestation in developing and emerging countries. Since the 2000s biofuel production has been rapidly developing to address issues of economic development, energy poverty and reduction of greenhouse gas (GHG) emissions. However, the sustainability of biofuels is being challenged in recent research, particularly at the environmental level, due to their impact on deforestation and the GHG emissions they can generate as a result of land use changes. In order to isolate the impact of bioethanol and biodiesel production among classic determinants of deforestation, we use a fixed effects panel model on biofuel production in 112 developing and emerging countries between 2001 and 2012. We find a positive relationship between bioethanol production and deforestation in these countries, among which we highlight the specificity of Upper-Middle-Income Countries (UMICs). An acceleration of incentives for the production of biofuels, linked to a desire to strengthen energy security from 2006 onwards, enables us to highlight higher marginal impacts for the production of bioethanol in the case of developing countries and UMICs. However, these results are not significant before 2006 for developing countries, and biodiesel production appears to have an impact on deforestation before 2006 on both subsamples. These last two results seem surprising and could be related to the role of biofuel production technologies and the crop yields used in their production. |
| Keywords: | Biofuel production; land use change; forest cover loss; panel data. |
| JEL: | Q16 Q23 Q55 |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:lef:wpaper:2017-09&r=ene |
| By: | Ruediger Bachmann; Gabriel Ehrlich; Dimitrije Ruzic |
| Abstract: | This paper uses the 2015 Volkswagen emissions scandal as a natural experiment to provide causal evidence that group reputation externalities matter for firms. Our estimates show statistically and economically significant declines in the U.S. sales and stock returns of, as well as public sentiment towards, BMW, Mercedes-Benz, and Smart as a result of the Volkswagen scandal. In particular, the scandal reduced the sales of these non-Volkswagen German manufacturers by approximately 76,000 vehicles over the following year, leading to a loss of approximately $3.7 billion of revenue. Volkswagen’s malfeasance materially harmed the group reputation of “German car engineering” in the United States. |
| Keywords: | automobiles, collective reputation, country reputation, difference-in-differences, event study, Google trends, firm reputation, natural experiment, reputation externalities, Twitter sentiment, Volkswagen emissions scandal |
| JEL: | D12 D90 F23 L14 L62 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6805&r=ene |
| By: | Rick van der Ploeg |
| Abstract: | A cap on global warming implies a tighter carbon budget which can be enforced with a credible second-best renewable energy subsidy designed to lock up fossil fuel and curb cumulative emissions. Such a subsidy brings forward the end of the fossil fuel era, but accelerates fossil fuel extraction and global warming in the short run. A weaker fossil fuel oligopoly implies that anticipation of a given global carbon budget induces fossil producers to deplete reserves more voraciously and accelerate global warming. This race to burn the last ton of carbon is more intensive for the feedback than open-loop Nash equilibrium, so that the Green Paradox effect of a renewable energy subsidy is stronger. There is an intermediate phase of limit pricing to keep renewable energy producers at bay, which becomes much more relevant when a cap on global warming is enforced. A stronger fossil fuel oligopoly lengthens the period of limit pricing and typically brings forward the carbon-free era. Finally, the mere risk of a cap on global warming being enforced at some unknown, future date makes fossil fuel extraction more voracious and accelerates global warming. |
| Keywords: | second-best climate policy, Green Paradox, carbon budget, stranded assets, oligopolistic resource markets, limit pricing, voracious extraction, regime shift |
| JEL: | H21 Q51 Q54 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6793&r=ene |
| By: | Chang, C-L.; Mai, T.K.; McAleer, M.J. |
| Abstract: | The purpose of the paper is to provide a clear mechanism for determining carbon emissions pricing in China as a guide to how carbon emissions might be mitigated to reduce fossil fuel pollution. The Chinese Government has promoted the development of clean energy, including hydroelectric power, wind power, and solar energy generation. In order to involve companies in carbon emissions control, a series of regional and provincial carbon markets have been established since 2013. Since China’s carbon market was established in 2013 and mainly run domestically, and not necessarily using market principles, there has been almost no research on China’s carbon price and volatility. This paper provides an introduction to China’s regional and provincial carbon markets, proposes how to establish a national market for pricing carbon emissions, discusses how and when these markets might be established, how they might perform, and the subsequent prices for China’s regional and national carbon markets. Power generation in manufacturing consumes more than other industries, with more than 40% of total coal consumption. Apart from manufacturing, the northern China heating system also relies on fossil fuels, mainly coal, which causes serious pollution. In order to understand the regional markets well, it is necessary to analyze the energy structure in these regions. Coal is the primary energy source in China, so that provinces that rely heavily on coal receive a greater number of carbon emissions permits from the Chinese Government. In order to establish a national carbon market for China, a detailed analysis of eight important regional markets will be presented. The four largest energy markets, namely Guangdong, Shanghai, Shenzhen and Hubei, traded around 82% of the total volume and 85% of the total value of the seven markets in 2017, as the industry structure of the western area is different from that of the eastern area. The China National Development and Reform Commission has proposed a national carbon market, which can attract investors and companies to participate in carbon emissions trading. This important issue will be investigated in the paper. |
| Keywords: | Pricing Chinese Carbon Emissions, National Pricing Policy, Energy, Volatility, Energy Finance, Provincial Decisions |
| JEL: | C22 C58 G12 Q48 |
| Date: | 2018–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:ems:eureir:104257&r=ene |
| By: | Sigit Perdana; Rod Tyers |
| Abstract: | Global agreement to reduce carbon emissions has been weakened by slowing growth and burden-sharing conflicts. This paper examines strategic interaction amongst regions in the choice to implement carbon taxation. Benefits from climate change mitigation are constructed via a meta-analysis of existing studies that link carbon concentration with average surface temperature and region-specific measures of economic welfare. Implementation costs are then derived by modeling national and global economic performance. Multiplayer, normal form games with payoffs derived by netting costs from shared benefits are then constructed, revealing that the US and China are net gainers in net present value terms from unilateral implementation. Europe’s choice is marginal but sensitive to the temperature scenario. The dominant strategy for all other countries is to free ride. For the three large economies, there are net gains that are bolstered by universal adoption. In total, the compensatory side payments that would induce universal adoption are sufficient and affordable. The net gains to all regions do not begin to appear for at least two decades, rendering commitment to abatement politically difficult. |
| Keywords: | Climate change, Carbon taxation, Global dynamic general equilibrium analysis |
| JEL: | F47 Q34 Q54 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:een:camaaa:2018-10&r=ene |
| By: | Afees A. Salisu; Lateef O. Akanni (Department of Economics, University of Lagos,Akoka, Lagos, Nigeria); Ahamuefula Ephraim Ogbonna (Centre for Econometric and Allied Research, University of Ibadan) |
| Abstract: | Extant studies in the literature on carbon emissions have done so using numerous methodologies. However, the Environmental Kuznets Curve has remained the workhorse for modelling the link between development and emissions. This study sets out to test the predictability of the EKC hypothesis for CO2 emissions in the US and consequently offers to answer two key questions. First, does the choice of estimator matter for the predictability of EKC in forecasting CO2 emissions? Second, are the results sensitive to any of the following: measures of CO2 emission and output and multiple forecast periods? The results uphold the stance of the inverted U-shaped relationship postulated by the EKC hypothesis. Also, the choice of estimator matters for accurate forecast performance of EKC for CO2 measures. More importantly, any estimator that ignores the inherent statistical properties of the predictors such as endogeneity, conditional heteroscedasticity and persistence, among others, may produce less desirable forecasts than the time series models. This conclusion is valid regardless of the proxies for CO2 emissions and output. |
| Keywords: | US, Environmental Kuznets Curve, CO2 Emissions, Forecast evaluation |
| JEL: | C53 Q51 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:cui:wpaper:0045&r=ene |
| By: | Thais NUNEZ-ROCHA; Inmaculada MARTíNEZ-ZARZOSO |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:leo:wpaper:2505&r=ene |
| By: | Thomas Kuhn (Chemnitz University of Technology, Department of Economics, Professur VWL IV Finanzwissenschaft); Radomir Pestow (Chemnitz University of Technology, Department of Economics, Professur VWL IV Finanzwissenschaft); Anja Zenker (Chemnitz University of Technology, Department of Economics, Professur VWL IV Finanzwissenschaft) |
| Abstract: | In this paper, we discuss the endogenous formation of climate coalitions in an issue-linkage regime. In particular, we propose to build a link to the issue of preferential free trade. Trade privileges exclusively granted to members of the climate coalition work as an incentive mechanism for countries to join in. A multi-stage strategic trade framework is used in which coalition (fringe) countries can dispose of a policy set comprising a discriminatory import-tariff on dirty goods as well as producer emission permits traded on a common (local) permits market. A fairly novel modelling of the preferential free trade area is incorporated which is at the core of our approach. We find strong support for the claim that trade liberalization can promote relatively large and effective climate coalitions compared to the single issue regime. As a policy implication, negotiations on international climate treaties and free trade arrangements should be interlinked. |
| Keywords: | Climate Change, International Environmental Agreements, Free Trade, Issue Linkage, Emission Permits |
| JEL: | Q54 Q56 F18 F15 Q58 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:tch:wpaper:cep018&r=ene |
| By: | Cahill-Webb, Finn |
| Abstract: | This paper explains the emergence of the "pledge and review" governance approach found in the Paris Agreement on Climate Change, in place of the "obligatory targets and timetables" approach found in the Kyoto Protocol, from a neo-Gramscian perspective. The main argument is that the adoption of pledge and review was a response to both the pressure to agree a new international treaty and the simultaneous divergence of interests and fragmentation of negotiation groups within the UNFCCC regime. In explaining this pressure to agree a new treaty, particular attention is given to the US and China, being the two largest emitters of greenhouse gases, looking at the key interests involved in shaping the recent move away from their long-held core negotiating positions of reluctance in accepting emission reductions. Shifts in the world political economy - the decline of US hegemony, the shift of power towards China and the East, and the emergence of a new multipolarity - and the complex nature of climate change as a problem were given as causes of fragmentation of the global climate regime. These power shifts all occur within the overarching dynamic of fossil capitalism, where the overuse of global sinks and the exploitation of natural resources remains unquestioned. Any attempt to address climate change emerges within this ideological framework of economic growth and economic development. This is continually apparent throughout the analysis, often influencing the actions of different interest groups and changes in the world political economy. When taken together, the pledge and review approach can be seen to have reinforced cooperation between nations and strengthened consensus building, facilitating the search for an agreement under differentiated interests. Being less fixed than obligatory quantitative emission reduction targets, this degree of flexibility is key to the functioning and adoption of the system. This flexibility allowed many of the key contentions within the negotiations to be sidestepped, in order for an agreement to be reached. |
| Keywords: | climate change,environmental governance,neo-Gramscianism,world political economy |
| JEL: | F50 F53 Q54 Q58 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ipewps:992018&r=ene |
| By: | Rita SOUSA; Andrés Camilo ÁLVAREZ-ESPINOSA; Nicolás ROJAS PARDO; Germán ROMERO OTALORA; Silvia Liliana CALDERON DIAZ; Catarina VAZAO |
| Abstract: | Este artículo analiza las implicaciones económicas de un Sistema de Comercio de Emisiones (SCE) en Colombia para el cumplimiento de los acuerdos de reducción de emisiones. Para ello se diseñó un módulo de comercio de emisiones en el modelo de equilibrio general MEG4C. A partir de este análisis se logró identificar que un SCE puede tener dos efectos: i) los sectores regulados incorporan el costo marginal de las emisiones en la producción, lo que trae una reducción en la producción y ii) los sectores sustituyen los bienes intensivos en emisiones, buscando minimizar los costos asociados al valor de permiso de emisión, lo que conduce a una disminución de las emisiones por cambio en la intensidad. Finalmente, se observa que cuando el recaudo, logrado por la venta de los permisos, se usa para fomentar la demanda de capital (incentivar la inversión), los resultados son positivos ya que estos recursos contribuyen a la transformación económica, al desarrollo sostenible y a la generación de otros co-beneficios. |
| Keywords: | sistema de comercio de emisiones, cambio climático, modelo de equilibrio general, mitigación |
| JEL: | C68 O44 Q54 |
| Date: | 2018–01–02 |
| URL: | http://d.repec.org/n?u=RePEc:col:000118:016051&r=ene |